Coloradans’ Green Energy Subsidies Reduced, Still Offer Paybacks

TL/DR –

Colorado tax credits for clean energy home improvements, originally set to last until 2032, were cut in advance of this deadline. However, the state still offers options for clean energy subsidies through the Home Energy Rebate Program, launched in November and providing up to $14,000 in discounts for electric energy appliances and home efficiency upgrades. Furthermore, Colorado has increased state-level rebates for purchasing or leasing electric vehicles, though the state’s tax credit for electric vehicle purchases has decreased from $3,500 to $750 due to budget shortfalls.

New solar panels installed in Summit County with state assistance, despite recent loss of federal tax credits

As 2026 commences, Colorado residents face reduced choices in financing their clean energy home upgrades. This is due to the early discontinuation of substantial tax credits. As part of the 2022 Inflation Reduction Act, a comprehensive climate and health law endorsed by former President Joe Biden and passed by congressional Democrats, these programs were initially put into play.

The Energy Efficient Home Improvement Credit was included in the Act, giving up to $3,200 in tax credits for various home efficiency measures and equipment such as heat pumps, water heaters, biomass stoves, and boilers. Additionally, the Residential Clean Energy Credit provided a 30% coverage of the cost of a home solar installation.

These measures were designed to entice consumers to shift from fossil fuels. Together with other climate measures in the Inflation Reduction Act, they were anticipated to reduce U.S. carbon emissions by approximately 40% compared to 2005 levels by 2030.

However, both tax credit programs ended on the last day of 2025. These subsidies were intended to continue until 2032 but were abolished under the One Big Beautiful Bill Act passed earlier by congressional Republicans and signed into law by President Donald Trump. This act also ended another tax credit program for new and used electric vehicles on September 30.

Rebates up to $14,000 for home upgrades still available

Despite the loss of these incentives, Colorado residents can still obtain subsidies for a range of clean energy appliances. In November, the state introduced the Home Energy Rebate Program, offering income-qualified Coloradans up to $14,000 in discounts for electric energy appliances and home efficiency upgrades.

The program was funded through federal resources preserved in the Inflation Reduction Act, with Colorado receiving just over $140 million to commence the program. These rebates are expected to be available through 2029, or until funds are exhausted. The rebates are income-based, with full amounts available to households earning below 80% of their county’s median income and up to half available to those earning between 80% and 150%.

Even with these subsidies, Colorado still faces challenges in reaching its goal of 100% net-zero greenhouse gas emissions relative to 2005 levels by 2050. As Colorado Energy Office Executive Director Will Toor said in a statement, “Burning fossil fuels in buildings, such as for heating and water heating, is among the leading sources of greenhouse gas emissions in Colorado.”

Despite the end of federal support for clean energy home upgrades, local and regional initiatives are available to help Colorado residents, especially in mountain communities where energy costs can be higher. For example, Carbondale-based nonprofit Energy Smart Colorado offers subsidized home energy assessments and rebates for solar installation and electrical appliances in more than a dozen western Colorado counties.

Boost in state rebates for electric vehicles

Following the end of federal tax credits worth up to $7,500 for electric vehicles on September 30, Colorado officials boosted state-level EV rebates. The state’s Vehicle Exchange Colorado Program offers rebates for residents who trade their gas- or diesel-powered vehicles for all-electric or plug-in hybrid cars.

Effective from November 1, rebates for purchasing or leasing an electric vehicle rose from $6,000 to $9,000 for new cars, and from $4,000 to $6,000 for used cars. However, due to persistent budget shortfalls in the state’s general fund, Colorado’s tax credit for electric vehicle purchases was reduced from $3,500 to $750 starting in 2026.

—
Read More US Economic News